The Liberal Democrats are to challenge Scotland Yard's decision not to prosecute any of the Labour peers involved in the "Ermingate" scandal, it was announced last night.

Chris Huhne, the party's justice spokesman, has asked John Yates, assistant commissioner of the Metropolitan police, to release confidential legal advice given to him by the Crown Prosecution Service, so the party can compare it with its own legal advice, which said some of the peers could face bribery charges.

The Liberal Democrats made the move after Scotland Yard said it would not investigate allegations that four Labour peers tried to change the law in favour of companies employing them.

The Sunday Times alleged last month that the peers - Lord Moonie, Lord Truscott, Lord Taylor of Blackburn and Lord Snape - had discussed amending legislation in return for a fee, which would be in breach of parliamentary standards. The peers have all denied breaking any rules.

Yesterday Huhne said: "Anybody listening to the Sunday Times tape of Lord Taylor of Blackburn could not fail to see how venal the process was with a peer effectively bidding up the price."

Lord Taylor has denied any wrong-doing.

Scotland Yard's decision not to prosecute was conveyed to Lady Royall, leader of the house, and Huhne in a letter from Yates. The four peers are under investigation by the Lords' interests committee to see if they had broken the rules. They were all accused of offering to change the law by tabling amendments for money to benefit a phoney company invented by Sunday Times reporters. Royall has said if they are found guilty they could face permanent suspension from the Lords.

In his letter to Huhne, Yates said: "I have carefully examined the position of Lord Taylor and Lord Truscott in the context of a possible investigation for the common law offence of bribery. I have also considered possible offences of misconduct in public office. I have sought and obtained written legal advice from the Crown Prosecution Service ...

"The application of the criminal law to members of the House of Lords in the circumstances that have arisen here is far from clear. In addition, there are very clear difficulties in gathering and adducing evidence in these circumstances in the context of parliamentary privilege.

"These factors, when set alongside the preliminary examination, lead us to the decision that the Metropolitan police will not undertake a criminal inquiry into any of the allegations raised."

Royall told peers yesterday: "I have met further with the Metropolitan police on this matter and they have now informed me of their decision not to take their inquiry any further ... The police have decided not to take further any inquiry in relation to this second referral. In both cases, however, the police are making clear that should any further evidence or information come to light they will of course have a duty to review their decision."

Calling Scotland Yards's decision "disappointing" last night, Huhne said it was "simply false to say that internal procedures will be able to deal with these cases, given that there is not even a mechanism for expelling miscreants".